freefall51

The New Energy Cold War: The Warsaw-Tehran Connection

To EnergyDiversification
"Europe is the real mystery here. For a continent supposedly scarred by World War II, it seems oblivious to the Russian situation."

My answer, this is not a mystery to me. I am German and I saw it coming in my home country over many years. This is in my opinion the outflow of the fact that at least one generation of left wing journalists from the ‘68 generation all with glowing agendas got into in the leading editorial positions of most newspapers and media outlets. Slowly but surely they brainwashed a decent part of the population into believing that America is a larger threat that the former Soviet Union. Finally it was cool among young people to condemn the US for whatever they did or not did. It did not mean a darn thing that the US helped Germany develop a democracy and prosper in a big way after WWII.

There is an overlay of political opinion caused by the fact that West Germany integrated East Germany. The West as you may know supported the East from falling off the cliff. But the support generated among the recipients a sense of entitlement. And no matter what was offered it was largely perceived as being not enough. There was enough hardship left that the old ideals of a socialist society never died. Remnants of the SED, former socialist unity party of East Germany are still existing and they have numerous followers, that seek political power. Obviously the SED was an affiliate of the Soviet Union franchise. Germany of today is a halfway socialist country where the government has a larger stake in everybody’s life than in the US.

I see analogous developments in the US elite media, which worry me a lot. Being brainwashed is subtle and steady. It comes in small doses, does not hurt it goes often unnoticed until it is perceived common sense. My best recommendation to the Americans is to stay on the outlook and don’t let anybody take away your (and now my) freedoms.

Speculation and the Price of Oil: An Unfriendly Note

Dear Mr. Banks,

you are smart like hell. But you are suffering from logorrhoea. Your message gets lost in the self indulgence of your verbiage. Be concise and stay on message in your next post.

Geologist: In Terms of Supply and Demand, the Oil Peak Is Past

JS Gordon, $ 38.00 / bbl for syncrude?

Here is my prediction. Just as the build up of LNG terminals is not designed to lower the NG prices but instead take advantage of NG prices that makes terminals feasible, just as the Canadian tar sand projects are not designed to bring the crude oil price down but instead take advantage of them, you will find at your surprise that syncrude plants will produce syncrude juuuust below the world market price of crude oil. If there is a positive difference between sales price and cost it will be pocketed by the owners of the process. And if not, we are lucky if this technology and the infrastructure that goes with it does not have to be subsidized with tax money.

Geologist: In Terms of Supply and Demand, the Oil Peak Is Past

I grew up riding with my grandparents on a wagon, that was pulled by two cows. I can do it again. Time to re-learn some basic skills.

Transocean: An Opportunity in Falling Oil

Jim,

You raise an interesting question that is not obviously not easy to answer for an outsider. My thinking goes like this (solely based on my background with long term supply contracts in the industrial gas industry):

RIG issues as list of their contracts for their 130 something rigs. Some of them are short term like 1 year, others are 3 - 5 years, the new rigs often with an option to extend for another 5 years to be exercised by the client. The contracted service rates should be escalated with some inflationary indices or alternatively go up or down with oil. I estimate that 15 - 20% of the service contracts are up for renewal every year. On average the profits that we see today have been contracted 2-3 years ago. For those contracts you should reasonably assume that the breakpoints where the rates are negatively impacted have been defined according to the oil prices 2 -3 years ago. I would not expect a big impact for the current service contracts if oil drops below $100 or even $80/ bbl. I snapped up somewhere (unfortunately I cant remember the source) that the latest contracts with PBR had a breakpoint of $ 100/ bbl. I remember that I thought that is conservative, when oil was above $ 130 at that time. Now the latest contracts are going to be effective in 2 years. What will the oil price be then?

Transocean: An Opportunity in Falling Oil

Pipo,

thanks for that link to Jim Rogers. What a smart dude that is.

It is not easy to be an oil bull these days. But I strongly believe that investment decisions with a volume of $ 1 B like for a deep water rig must be based on strongest fundamentals and cannot be based on the vagaries of momentum traders. That would be completely ridiculous. Jim Rogers makes a compelling bull case.

Events in Russia Could Push U.S. Toward a Clearer Energy Policy

Quick estimate what kind of sunroof it takes to power my 180 hp Explorer:

Assume 0.76 kW/hp
Sun is shining 60 deg on suncollector, efficiency following cosinus function cos (90-60) deg = cos (30 deg) = 0.866
1200 KW /m2
Sun/Power Conversion Efficiency 27 %
Inverter efficiency 75 %
Electro Motor efficiency 90 %.


Here we go

180 hp * 0.76 kW/ hp
----------------------... = 722 m2
(1.2 kW/ m2 * 0.27 * 0.75 * 0.90 * 0.866)

The sunroof is then 722 m2 * 11 ft2/ m2 ~ 7.945 ft2, just about the area of my lot at home. So, I am sitting in the dark, while my car is being fueled. This assumes the sun is shining of course.

Can we stop this please.

Events in Russia Could Push U.S. Toward a Clearer Energy Policy

I like the Chevy Volt car concept better that a pure plug-in car PHEV because it gets you mileage and independence of finding a socket (try to find a socket for your lap top on an airport). Reloading is associated with long reloading and waiting times. The plug in cable is not long and the battery is not large enough to let you drive a 300 mile radius. Flexibility, ease of operation and mileage are prime conditions for wide acceptance. I understand the Volt has a primary electro motor for driving, feeding off a battery. The battery is backed up by a combustion motor with a generator to reload the battery, if you have to. You can reload while you are driving and get at least the mileage of a Prius.
I heard rumours of 100 mpg. No, that can't be true, doesn't it? Downside again two drives necessary, a small tank for fuel and a small trunk?

Recapping My Great Calls on Oil

You never should own an airline.

Time to Pull the Trigger on Four Oil Service Stocks

On RIGs taxes:

From RIG's 10Q filing ending June 20, 08 I understand

1.) They are a Cayman Islands company. The earnings are not subject to income tax in the Cayman Islands because the country does not levy tax on corporate income.

2.) They pay taxes all over the world through operation of various subsidiaries in a number of countries throughout the world. Income taxes have been provided based upon the tax laws and rates in the countries in which operations are conducted and income is earned. .

3.) They pay taxes in the US only for key subsidiaries that reside in the US.

4.) The estimated annual effective tax rate for the six months ended June 30, 2008 and June 30, 2007 was 12.5 percent and 14.9 percent, respectively based on estimated annual income before income taxes for each period after adjusting for certain items such as net gains on rig sales and various other discrete items.

5.) The taxation rate is low and has dropped since last year. Due to the diversity of the places where taxes are paid, I would assume a certain stability of the tax rate. The big unknown is the liability for unrecognized tax benefits that increased to $482 million, including interest and penalties. This may or may not be due some time later. There are some disputes going on with the tax authorities in the US and Brazil.

As a consolation in case of liquidation of the company the liability probably wont be paid off.

Time to Pull the Trigger on Four Oil Service Stocks

You are speaking my mind.

Oil: Demand Destruction Overdone?

I think the steep gradient of the recent oil price increases was as important as the absolute level, shocking a lot of people and letting them pull their horns in. Now the public is conditioned to these prices and with some price relief the shock effect is fading out. We are coming closer to the next round of price increases. Gas prices are still only half of what the Europeans pay. I would agree however that the Americans of all folks in the world have the biggest potential to save energy and make a difference to the oil price.

Negative Trend for Oil Exploration and Production Stocks

I hate to admit this. But whenever I followed Zacks advice as a subscriber I lost money. Zacks is most mostly a momentum - go with the flow -service. Once the flows has been identified the market turns around on a dime. Better to buy conviction and keep the view on the horizon.

Offshore Drilling Is Not the Solution

Geophys,

I can feel your pain.

$200 Oil: Before Decade's End, Not Year's

The addition of 50,000 cars/day in Asia adds about a 10 days equivalent of US oil consumption per year to the demand pool.